Japan has traditionally had a high savings ratio, but, in past decade the savings ratio has fallen to be close to European / US levels. Graph showing Japan Savings Rates Japan’s economy chasing illusions Since 1998, though Japanese saving rates have declined. The graph is a bit hard to read, but, since 2004, Japanese saving …
Despite the weakness of the UK economy, the Pound is forecast to rise against the Euro, due to the ongoing uncertainty surrounding the debt crisis in the Eurozone. With Greece and other countries at risk of default, and even facing the prospect of a Euro break up, the Pound Sterling looks relatively attractive – despite …
Since 2007, the UK has experienced a variety of economic shocks which have caused a prolonged period of economic stagnation, high unemployment and uncertainty. In 2011, the economic recovery proved much weaker than expected, yet inflation was stubbornly high. In 2012, fundamental weaknesses are likely to keep the UK economy depressed with high unemployment and …
Readers Question Can a fiscal stimulus package reduce the extent of the recession? Fiscal stimulus involves a combination of lower tax cuts and higher spending. In theory the tax cuts will increase disposable income and therefore encourage consumer spending, leading to higher aggregate demand and economic growth. Fiscal stimulus is typically financed by higher government …
Readers Question: What on Earth is the point of the Eurozone borrowing money from China when the ECB can print any amount of money it wants any time? Of course the effect of the ECB printing money donating it to indebted Euro countries and/or the banks holding those countries’ bonds is likely to be inflationary …
Readers Question: What is economic analysis? Can you give some examples? Kindly refer me to an easy to read book on economic analysis. Economic analysis involves examining issues and problems from the perspective of an economist. Economic analysis would involve some or all of the following: Examining the opportunity cost of a decision. (e.g. if the …
Readers Question: Could you explain this article China had pegged its currency to the dollar, keeping its value artificially low. To peg your currency against the dollar This means that China has been trying to keep the value of its currency against the dollar the same. For example, if 1 Chinese Yuan = 0.16 Dollars …
Readers Question: Can you please elaborate on “fiscal devaluation” as a suggested solution for Euro area competitiveness problems? Fiscal devaluation is an attempt to restore competitiveness through changes to the tax system. In an exchange rate devaluation, a country allows its currency to fall in value. This makes the countries exports cheaper and more competitive; …